17170. This chapter shall be known and may be cited as the
California School Finance Authority Act.
17171. The Legislature hereby finds and declares that it is in the
interest of the state and its people for the state to do all of the
following:
(a) Reconstruct, remodel, or replace existing school buildings
that are educationally inadequate or that do not meet current
structural safety requirements.
(b) Acquire new schoolsites and buildings to be made available to
school districts, charter schools, and community college districts
for the pupils of the public education system, which is a matter of
general concern inasmuch as the education of the state's children is
an obligation and function of the state.
(c) Assist school districts and community college districts by
providing access to financing for working capital and capital
improvements.
17172. There is in the state government the California School
Finance Authority. The authority is a public instrumentality, and the
exercise by the authority of the powers conferred by this chapter is
an essential public function.
17173. As used in this chapter, the following words and terms shall
have the following meanings, unless the context indicates or
requires another or different meaning or intent:
(a) "Act" means the California School Finance Authority Act.
(b) "Agent" means a county or city board of education or
superintendent of schools acting with the board's consent, on behalf
of one or more school districts for any purpose of this chapter, the
Board of Governors of the California Community Colleges or the
Chancellor of the California Community Colleges acting with the Board
of Governors' consent, on behalf of one or more community college
districts for any purpose of this chapter, and the school district,
county office of education, or other chartering entity acting with
the consent of, and on behalf of, one or more charter schools for any
purpose of this chapter.
(c) "Authority" means the California School Finance Authority, or
any board, body, commission, department, or officer succeeding to the
principal functions of the authority, or to which the powers
conferred upon the authority by this chapter shall be given by law.
(d) "Bonds" or "revenue bonds" means bonds, notes, lease
obligations, certificates of participation, commercial paper, and any
other evidences of indebtedness.
(e) "Cost," as applied to all or part of a project financed or
refinanced pursuant to this chapter, means and includes all or any
part of the cost of any of the following:
(1) Construction.
(2) Acquisition or improvement of all lands, structures, real or
personal property, rights, rights-of-way, franchises, easements, and
interests acquired or used for a project.
(3) Demolition or removal of any buildings or structures on land
acquired for a project, including the acquisition of any lands to
which the buildings or structures may be moved.
(4) All machinery and equipment.
(5) Financing or refinancing charges, including, but not limited
to, credit enhancement costs, and prepayment penalties.
(6) Interest prior to, during, and for a period following, the
completion of any construction or improvement determined by the
authority.
(7) Provisions for working capital.
(8) Reserves for principal and interest, and for extensions,
enlargements, additions, replacements, renovations, and improvements.
(9) Engineering, architectural, financial, and legal services,
plans, specifications, studies, surveys, estimates, administrative
expenses, and other expenses necessary or incident to the
construction, acquisition, or improvement of any project or any
financing or refinancing under this chapter.
(f) "Educational facility" means any property, facility,
structure, equipment, or furnishings used or operated in conjunction
with one or more public schools, including charter schools, or
community colleges, including, but not limited to, all of the
following:
(1) Classrooms.
(2) Auditoriums.
(3) Student centers.
(4) Administrative offices.
(5) Sports facilities.
(6) Maintenance, storage, or utility facilities.
(7) All necessary or usual attendant and related facilities and
equipment, including streets, parking, and supportive service
facilities or structures required or useful for the effective
operation of the educational facility.
(g) "Participating party" means a school district, charter school,
county office of education, or community college district that
undertakes, itself or through an agent, the financing or refinancing
of a project or of working capital pursuant to this chapter.
"Participating party" shall also be deemed to refer to the agent to
the extent the agent is acting on behalf of the school district,
charter school, county office of education, or community college
district for any purpose of this chapter.
(h) "Project" means the acquisition, construction, expansion,
remodeling, renovation, improvement, furnishing, or equipping of an
educational facility to be financed or refinanced pursuant to this
chapter. "Project" may include any combination of the foregoing
undertaken jointly by any participating district with one or more
other participating parties.
(i) "Working capital" means funds to be used by, or on behalf of,
a participating party to pay maintenance or operating expenses, or
any other costs that would be treated as an expense item under
generally accepted accounting principles in connection with the
ownership or operation of an educational facility, including, but not
limited to, all of the following:
(1) Reserves for maintenance or operating expenses.
(2) Interest for a period not to exceed two years on any loan for
working capital made pursuant to this chapter.
(3) Reserves for debt service, and any other costs necessary or
incidental to, financing pursuant to this chapter.
(4) Payments made by a participating party for the rent or lease
of an educational facility.
(j) "Certificate of participation" means an undivided interest in
one or more bonds, leases, loans, installment sales, or other
agreements of a participating party or parties.
(k) "Charter school" means a school established pursuant to Part
26.8 (commencing with Section 47600).
17174. (a) The authority shall be comprised of the following
members:
(1) The Treasurer, who shall serve as chairperson.
(2) The Director of the State Department of Finance.
(3) The Superintendent of Public Instruction.
(b) Each member of the authority may designate an individual from
the member's department or agency to act for the member and represent
the member at all meetings.
(c) Members of the authority or their designees shall serve
without compensation, but may be reimbursed by the authority for
necessary and reasonable expenses incurred in the discharge of their
duties.
17175. (a) Upon the first appointment of its members, and
thereafter on or after March 31 of each year, the authority shall
elect from its members a vice chairperson and a secretary-treasurer,
who shall hold office until the following March 31, and shall
continue to serve until their successors have been elected.
(b) On behalf of the authority, the chairperson shall appoint an
executive director, who shall not be a member of the authority, and
who shall serve at the pleasure of the authority. The executive
director shall receive the compensation fixed for that purpose by the
authority.
The authority may delegate to the executive director or any other
official or employee of the authority any powers and duties that the
authority deems proper, including, but not limited to, the power to
enter into contracts on behalf of the authority.
17176. (a) Except as otherwise provided by subdivision (b), the
Attorney General shall be the legal counsel for the authority.
(b) Upon the approval of the Attorney General, which shall not be
unreasonably withheld, the authority may employ legal counsel as, in
its judgment, is necessary or advisable to enable it to carry out the
duties and functions of the authority pursuant to this chapter,
including, but not limited to, the employment of bond counsel in
connection with the issuance of bonds.
17177. The executive director or other person designated by
resolution of the authority shall maintain a record of the
proceedings of the authority, and shall be custodian of all books,
documents, and papers filed with the authority, the minute book or
journal of the authority, and its official seal. The executive
director or the designee may cause copies to be made of all minutes
and other records and documents of the authority, and may certify
under the official seal of the authority that the copies are true
copies, and all persons dealing with the authority may rely upon that
certification.
17178. Two members of the authority shall constitute a quorum. The
affirmative vote of a majority of a quorum shall be necessary for any
action taken by the authority. A vacancy in the membership of the
authority shall not impair the right of a quorum to exercise all the
rights and perform all the duties of the authority. Each meeting of
the authority shall be open to the public and shall be held in
accordance with Article 9 (commencing with Section 11120) of Chapter
1 of Part 1 of Division 3 of Title 2 of the Government Code.
Resolutions of the authority need not be published or posted. The
authority may delegate by resolution to one or more of its members or
its executive director any powers and duties as it may deem proper.
17179. The provisions of this chapter shall be administered by the
authority, which shall have and is hereby vested with all powers
reasonably necessary to carry out the powers and responsibilities
expressly granted or imposed under this chapter.
17180. The authority is hereby authorized to do all of the
following:
(a) Adopt bylaws for the regulation of its affairs and the conduct
of its business.
(b) Adopt an official seal.
(c) Sue and be sued in its own name.
(d) Receive and accept gifts, grants, or donations of money for
any of the purposes of this chapter from any of the following:
(1) A federal agency.
(2) A state agency.
(3) A municipality, county, or other political subdivision of the
state.
(4) An individual, association, or corporation.
(e) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out the
purposes of this chapter.
(f) (1) Determine the location and character of any project to be
financed or refinanced under this chapter, and acquire, construct,
enlarge, remodel, renovate, alter, improve, furnish, equip, own,
maintain, manage, repair, operate, lease as lessee or lessor, or
regulate the same.
(2) Designate a participating party as its agent, with authority
to enter into contracts, for any of the purposes specified in
paragraph (1).
(3) Enter into contracts for any of the purposes specified in
paragraph (1).
(4) Enter into contracts for the management and operation of a
project owned by the authority.
(g) Acquire, directly or by and through a participating party as
its agent, by purchase solely from funds provided pursuant to this
chapter, or by gift or devise, and sell, by installment or otherwise,
property, rights, rights-of-way, franchises, easements, and other
interests in lands, including, but not limited to, lands lying under
water, and riparian rights, located within the state that the
authority deems necessary or convenient for the acquisition,
construction, financing, or operation of a project. The authority may
do so upon the terms, and at the prices, it considers reasonable and
upon which it can agree with the owner, and may take the title to
the interest in the name of the authority or in the name of a
participating party as its agent.
(h) Receive and accept from any source loans, contributions, or
grants for, or in aid of, the construction, financing, or refinancing
of all or part of a project, in the form of money, property, labor,
or other things of value.
(i) Pursuant to an agreement between the authority and the
participating party, make, directly or through a lending institution,
secured or unsecured loans to, or purchase secured or unsecured
loans from, or purchase all or part of any rights to or possibilities
regarding the state share of funding for school facilities approved
by the State Allocation Board pursuant to Chapter 12.5 (commencing
with Section 17070.10). The purchase of all or part of any rights to,
or possibilities regarding, the state contribution for funding for
school facilities approved by the State Allocation Board shall be
limited to amounts approved and funded or amounts approved but not
yet funded from proceeds of state bonds already authorized by the
electors but not yet issued. Loans or purchases completed pursuant to
this section may be used to finance or refinance a project or
provide working capital. A loan to finance or refinance a project
shall not exceed the total cost of the project, as determined by the
participating party and approved by the authority.
(j) Upon the terms and conditions the authority deems proper,
lease a project being financed or refinanced pursuant to this chapter
to a participating party, and charge and collect rent therefor. The
authority may terminate a lease pursuant to this subdivision upon the
lessee's failure to comply with any of its obligations under the
lease. The lease may include any of the following provisions:
(1) That the lessee shall have the option to renew the term of the
lease for the period or periods, and at the rent, determined by the
authority, or to purchase any or all of the project.
(2) That upon payment by the participating party of all of the
indebtedness incurred by the authority for the financing of the
project or for the refinancing of the participating party's
outstanding indebtedness, the authority may convey any or all of the
project to the lessee or lessees, with or without further
consideration.
(k) Charge and equitably apportion among participating parties its
administrative costs and expenses incurred pursuant to this chapter.
(l) (1) Obtain, or aid in obtaining, from any state or federal
agency or any private company, any insurance, guarantee, letter, or
line of credit regarding, or of, or for, the payment or repayment of
all or part of the interest, principal, or both, on any loan, lease,
or obligation, or any instrument evidencing or securing the same,
made or entered into pursuant to this chapter, or on any bonds issued
pursuant to this chapter.
(2) Notwithstanding any other provision of this chapter, enter
into any agreement, contract, or any other instrument regarding any
insurance, guarantee, letter, or line of credit specified in
paragraph (1), and accept payment in the manner and form provided
therein in the event of default by a participating party.
(3) Assign any insurance, guarantee, letter, or line of credit
specified in paragraph (1) as security for bonds issued by the
authority.
(m) Enter into any agreements or contracts, including, but not
limited to, agreements for liquidity or credit enhancement, execute
any instruments, and any other act or thing necessary, convenient, or
desirable for the purposes of the authority or to carry out any
express power granted the authority pursuant to this chapter.
(n) At the discretion of the authority, invest any moneys held in
reserve or in sinking funds, or any moneys not required for immediate
use or disbursement, in obligations authorized by the resolution
authorizing the bonds secured by the investment, or by law governing
the investment of trust funds in the custody of the Treasurer.
(o) Adopt guidelines for grants, bonds, and other evidences of
indebtedness.
17180.5. (a) In addition to the powers authorized pursuant to
Section 17180, the authority shall perform its duties under the
Charter School Facilities Program to provide funding for facilities
for charter school pupils as set forth in Article 12 (commencing with
Section 17078.50) of Chapter 12.5.
(b) Notwithstanding any provision of law to the contrary,
including, but not limited to, Section 17197, with regard to the
authority's implementation of funding for charter school facilities,
Article 12 (commencing with Section 17078.50) shall control over
conflicting provisions, if any, in this chapter.
17181. (a) The California School Finance Authority Fund is hereby
created in the State Treasury, to be administered by the authority.
Notwithstanding Section 13340 of the Government Code, all moneys in
the fund shall be continuously appropriated without regard to fiscal
year for the purposes of this chapter. The authority may pledge any
or all of the moneys in the fund as security for payment of the
principal of, and interest on, any particular issuance of bonds
pursuant to this chapter. For that purpose, or as necessary or
convenient to the accomplishment of any other purpose of this
chapter, the authority may divide the fund into separate accounts.
All moneys accruing to the authority pursuant to this chapter from
any source shall be deposited in the fund.
(b) Subject to any priorities created by the pledge of particular
moneys in the fund to secure any issuance of bonds of the authority,
and to reasonable administrative costs incurred by the authority in
implementing this chapter, all moneys in the fund, regardless of the
source, shall be held in trust for the security and payment of bonds
of the authority, and shall not be used or pledged for any other
purpose while any bonds are outstanding and unpaid. Nothing in this
subdivision shall be construed to limit the power of the authority to
make loans with bond proceeds in accordance with the terms of the
resolution authorizing the issuance of those bonds.
(c) Pursuant to any agreements with the holders of particular
bonds pledging any particular assets, revenues, or moneys, the
authority may create separate accounts in the fund to manage the
assets, revenues, or moneys in the manner prescribed by the
agreements.
(d) From time to time, the authority may direct the Treasurer to
do any of the following:
(1) Invest moneys in the fund which are not required for its
current needs, including, but not limited to, proceeds from the sale
of any bonds in eligible securities specified in Section 16430 of the
Government Code and designated by the authority, or in any other
securities or obligations designated by the authority, in the
resolution authorizing the issuance of the bonds payable or secured
by the moneys.
(2) Deposit moneys in the fund in interest bearing accounts in
state or national banks or other financial institutions having
principal offices in the state.
(3) Transfer moneys in the fund to the Surplus Money Investment
Fund for investment pursuant to Article 4 (commencing with Section
16470) of Chapter 3 of Part 4 of Division 4 of Title 2 of the
Government Code.
Notwithstanding Section 16305.7 of the Government Code, all
interest or other earnings resulting from an investment or deposit
pursuant to this subdivision shall be deposited in the fund.
(e) Except as otherwise provided in paragraph (3) of subdivision
(d), no moneys in the fund shall be subject to transfer to any other
fund pursuant to any provision of Part 2 (commencing with Section
16300) of Division 4 of Title 2 of the Government Code.
17182. (a) Except as otherwise provided in subdivision (b), all
expenses incurred by the authority in implementing this chapter shall
be payable solely from funds appropriated for purposes of this
chapter, and the authority shall not incur liabilities in excess of
the amount of those funds.
(b) The authority may request a loan by the Pooled Money
Investment Board from the Pooled Money Investment Account, in
accordance with Section 16312 of the Government Code, and may execute
those documents required by the Pooled Money Investment Board to
obtain and repay the loan. The loan shall be deposited in the fund
for the purposes of carrying out the provisions of this chapter. The
amount of the loan shall not exceed the amount of the unsold bonds
that the authority by resolution, has authorized to be sold for the
purposes of this chapter.
17183. (a) From time to time, the authority may, by resolution,
issue its revenue bonds in order to provide funds for any of the
purposes of this chapter. Bonds may be issued to finance any of the
following:
(1) A single project or financing of working capital for a single
participating party.
(2) A series of projects or financings of working capital for a
single participating party.
(3) A single project or financing of working capital for several
participating parties.
(4) Several projects or financing of working capital for several
participating parties.
(5) A joint venture school facilities construction project
undertaken pursuant to Article 5 (commencing with Section 17060) of
Chapter 12.
(b) Except as otherwise expressly provided by the authority, all
revenue bonds shall be payable from any available revenues or moneys
of the authority not otherwise pledged, subject only to any
agreements with holders of particular bonds or notes pledging any
particular revenue or moneys. Notwithstanding that revenue bonds
issued pursuant to this section may be payable from a special fund,
the revenue bonds shall be, and shall be deemed to be for all
purposes, negotiable instruments, subject only to the provisions of
the revenue bonds for registration.
(c) The revenue bonds of the authority may be issued as serial
bonds, term bonds, or the authority, in its discretion, may issue
bonds of both types. The issuance shall be in accordance with the
indenture, trust agreement, or resolution relating to the revenue
bonds, which shall provide all of the following:
(1) The date or dates of the bonds.
(2) The date or dates upon which the bonds will mature, not to
exceed 40 years from their respective dates.
(3) The interest rate or rates, or methods of determining the
interest rate or rates, of the bonds.
(4) When the bonds are payable.
(5) The denominations of the bonds.
(6) The form of the bonds, which shall be either bearer or
registered.
(7) The registration privileges of the bonds.
(8) The manner in which the bonds are to be executed.
(9) The place or places at which the bonds shall be payable in
lawful money of the United States of America.
(10) The terms of redemption of the bonds.
(d) After giving due consideration to the recommendations of the
participating party or parties, the revenue bonds of the authority
shall be sold by the Treasurer at either a public or private sale at
a price or prices, and upon the terms and conditions prescribed by
the authority. The revenue bonds of the authority may be sold at,
above, or below the par value of the bonds.
(e) Pending the preparation of the definitive bonds, the authority
may issue interim receipts or certificates or temporary bonds that
shall be exchanged for the definitive bonds.
(f) Any resolution authorizing the issuance of any bonds of the
authority, or any issue of revenue bonds of the authority, may
include any of the following provisions:
(1) Provisions pledging all or any part of the proceeds of the
bonds or revenue of a project or loan.
(2) Provisions concerning the replacement of mutilated, destroyed,
stolen, or lost bonds.
(3) Provisions specifying insurance to be maintained on the
project and the authorized uses of the proceeds of the insurance.
(4) Covenants against the mortgaging or otherwise encumbering,
selling, leasing, pledging, placing a charge upon, or otherwise
disposing of the project prior to the payment of the bonds issued to
finance the project.
(5) Provisions specifying the events of default, terms upon which
the bonds may be declared due before maturity, and the terms upon
which the declaration and its consequences may be waived.
(6) The rights, liabilities, powers, and duties arising upon the
breach of any covenants, conditions, or obligations.
(7) Vesting of the right to enforce covenants in a trustee.
(8) The terms upon which all or any percentage of the bondholders
may enforce covenants or duties.
(9) Procedures for amending the terms of the resolution, with or
without the consent of the holders of a specified number of bonds.
(10) Provision for any other acts or things deemed necessary,
convenient, or desirable by the authority to secure the bonds or
improve their marketability.
(g) The validity of the authorization and issuance of any bond
issue shall not be affected by proceedings for the acquisition,
construction, or improvement of any project, or by contracts relating
to those proceedings. Any resolution authorizing the issuance of any
bonds of the authority may provide authorization for the bonds to
bear a statement certifying that they are issued pursuant to this
chapter. Bonds bearing that statement shall be conclusively deemed
valid and issued in conformity with this chapter. Reference on the
face of the bonds to the resolution by its date of adoption shall
incorporate the provisions of the resolution and of this chapter into
the terms of the bonds.
(h) Members of the authority, or any person executing the revenue
bonds of the authority, shall not incur personal liability on the
bonds, nor shall these persons incur personal liability or
accountability by reason of the issuance of the revenue bonds of the
authority.
(i) The authority is authorized, out of any funds available for
that purpose, to purchase revenue bonds of the authority. The
authority may hold, pledge, cancel, or resell any bonds purchased
under the authority of this subdivision, subject to, and in
accordance with, agreements with bondholders.
(j) The financing or refinancing of projects or working capital
may be provided pursuant to this chapter by means other than revenue
bonds, at the discretion of the authority, including financing or
refinancing through certificates of participation, or other
interests, in bonds, loans, leases, installment sales, or other
agreements of the participating party or parties. In this connection,
the authority may do all things and execute and deliver all
documents and instruments as may be necessary or desirable with
regard to issuance of the certificates of participation or other
means of financing or refinancing.
(k) The authority may by resolution issue its revenue bonds in the
form of commercial paper.
17183.5. In enacting this chapter, it is the intent of the
Legislature to provide financing only for projects demonstrated by
the participating party to be financially feasible. In demonstrating
financial feasibility, the participating party may take into account
all of its funds, and may base future projections upon historical
experience or reasonable expectations, or a combination thereof.
Nothing in this section shall be construed to imply that any project
is required to produce revenue in order to be financed under this
chapter.
17184. (a) In the discretion of the authority, any revenue bonds of
the authority issued under this chapter may be secured by a trust
agreement, or by indenture by and between the authority and a
corporate trustee or trustees, including the Treasurer or any trust
company or bank having the powers of a trust company within or
outside the state.
(b) Any trust agreement, indenture, or any resolution providing
for the issuance of bonds of the authority, may pledge or assign the
proceeds of the bonds, and the revenues to be received by, a
participating party or parties.
(c) Any trust agreement, indenture, or resolution providing for
the issuance of revenue bonds of the authority may include any
provisions for the protection of, and the enforcement of the rights
and remedies of, bondholders as may be reasonable and proper and not
in violation of any law, including provisions included in any
resolution or resolutions of the authority provided under subdivision
(a) or (b).
(d) Any trust agreement or indenture may prescribe the rights and
remedies of the bondholders, and of the trustee or trustees, and may
restrict the individual right of action of the bondholders.
(e) Any trust agreement, indenture, or resolution may include any
other provisions deemed by the authority to be reasonable and proper
for the security of the bondholders.
(f) Notwithstanding any other provision of law, the Treasurer
shall not be deemed to have a conflict of interest by reason of his
or her capacity as trustee pursuant to this chapter.
17185. (a) Notwithstanding any other provision of law, revenue
bonds issued under this chapter are not and shall not be deemed to
constitute a debt or liability of the state, or any political
subdivision thereof, and are not and shall not be deemed to be a
pledge of the faith and credit of the state, or any political
subdivision thereof, other than the authority. Revenue bonds of the
authority shall be payable solely from funds provided under this
chapter.
(b) Each revenue bond of the authority shall include a statement
on the face of the bond that neither the State of California nor the
authority is obligated to pay the principal or interest thereon,
except from revenues of the authority, and shall also include a
statement that neither the faith or credit, nor the taxing power of
the State of California, or any political subdivision, is pledged to
the payment of the principal or interest of the bonds.
(c) The issuance of revenue bonds under this chapter shall not
directly, indirectly, or contingently obligate the state, or any
political subdivision thereof, to levy or pledge any form of
taxation, or make any appropriation for their payment.
17186. (a) Any holder of revenue bonds issued under this chapter,
or any coupons appertaining thereto, or the trustee or trustees under
any trust agreement, indenture, or resolution, may, either at law or
in equity, by suit, action, mandamus, or other proceedings, protect
and enforce any rights conferred under state law, by this chapter, or
under the terms of any trust agreement, indenture, or resolution,
except to the extent that these rights may be otherwise restricted by
any resolution authorizing the issuance of these bonds, or by any
trust agreement or indenture securing these bonds.
(b) Any holder of revenue bonds issued under this chapter, or any
coupons appertaining thereto, or the trustee or trustees under any
trust agreement, indenture, or resolution, may enforce and compel the
performance of all duties required under this chapter, or by any
trust agreement, indenture, or resolution, to be performed by the
authority, or by any officer, employee, or agent of the authority.
17187. All moneys received under this chapter, whether received as
proceeds from the sale of revenue bonds or as revenues, are trust
funds to be held and applied solely as provided in this chapter. Any
officer, bank, or trust company with whom those moneys have been
deposited, shall act as trustee of those moneys and shall hold and
apply them for those purposes, subject to the requirements of this
chapter and the resolution authorizing the bonds of any issue, or the
trust agreement or indenture securing those bonds, may provide.
17188. (a) The authority may provide for the issuance of the
revenue bonds of the authority for the purpose of refunding any
bonds, or any series or issue of the revenue bonds of the authority
then outstanding, and may include the payment of any redemption
premium for those bonds and any interest accrued or to accrue to the
date of redemption and purchase or maturity of those bonds.
(b) The proceeds of any bonds issued for the purpose of refunding
of outstanding bonds may, in the discretion of the authority, be
applied to the purchase or redemption prior to maturity or retirement
at maturity of the outstanding bonds on their earliest or any
subsequent redemption date or upon the purchase or at the maturity
thereof, or paid to a third person to assume the authority's
obligation to make those payments, and may, pending that application,
be placed in escrow to be applied to the purchase or retirement at
maturity or redemption on any date or dates as may be determined by
the authority.
(c) Any escrowed proceeds, pending such use may be invested and
reinvested in obligations or securities authorized by resolution of
the authority, maturing at any time or times as shall be appropriate
to assure the prompt payment, as to principal, interest, and
redemption premium, if any, of the outstanding bonds to be so
refunded. The interest, income and profits, if any, earned or
realized on any investment may also be applied to the payment of the
outstanding bonds to be so refunded or of interest in the refunding
bonds. After the terms of the escrow have been fully satisfied and
carried out, any balance of proceeds and interest, income profits, if
any, earned or realized on the investments thereof may be returned
to the authority for use by it in any lawful manner.
(d) All refunding bonds are subject to the provisions of this
chapter, in the same manner and to the same extent, as other bonds
issued pursuant to this chapter.
17189. (a) Revenue bonds issued by the authority under this chapter
shall be designated as securities in which all banks, bankers,
savings banks, trust companies, and other persons engaged in a
banking business; all insurance companies, insurance associations,
and other persons carrying on an insurance business; any
administrators, executors, guardians, trustees, and other
fiduciaries; and any other persons who are now or who may hereafter
be authorized to invest in bonds or other obligations of the state,
may properly and legally invest any funds, including capital
belonging to them or within their control.
(b) Revenue bonds issued by the authority under this chapter,
other notes or securities, or obligations are hereby made securities
which may properly and legally be deposited with, and received by,
any state or municipal officer, or agency of the state for any
purpose for which the deposit of bonds or other obligations of the
state are, or may hereafter be, authorized by law.
17190. (a) Any bonds issued under this chapter, their transfer, and
income therefrom shall at all times be free from taxation of every
kind by the state and by all political subdivisions of the state.
(b) The authority is not required to pay any taxes or assessments
upon, or with respect to, any project or property acquired by or for
the authority under this chapter, or upon any income therefrom, or on
or from any other assets or operations of the authority.
17191. (a) The State of California pledges and agrees with the
holders of the bonds issued pursuant to this chapter, and with those
parties who may enter into contracts with the authority pursuant to
the provisions of this chapter, that the state will not limit, alter,
or restrict the rights hereby vested in the authority to finance
educational facilities. The State of California pledges and agrees to
fulfill the terms of any agreements made with the holders of bonds
authorized by this chapter, and with the parties who may enter into
contracts with the authority pursuant to this chapter, and pledges
and agrees not to impair the rights or remedies of the holders of any
revenue bonds or any parties until the bonds, together with
interest, are fully paid and discharged and any contracts are fully
performed on the part of the authority.
(b) The authority shall have the right to include the pledges made
pursuant to this section in its revenue bonds and contracts.
17192. (a) Pledges by or to the authority of revenues, moneys,
accounts, accounts receivable, contract rights, or other rights to
payment of any other kind made by or to the authority pursuant to
this chapter shall be valid and binding from the time the pledge is
made for the benefit of the pledges, and the successors thereto.
(b) The revenues, moneys, accounts, accounts receivable, and other
rights to payment of any other kind pledged by or to the authority
or its assignees, shall immediately be subject to the lien of the
pledge without physical delivery, or any further act. The lien of any
pledge shall be valid and binding against all parties, irrespective
of whether the parties have notice of the claim. The trust agreement,
indenture, resolution, or other instrument by which any pledge is
created need not be recorded.
17193. (a) The authority shall fix, revise, charge, and collect
rents for the use of each project owned by the authority, and may
contract with any person, partnership, association, corporation, or
other body, whether public or private, for that purpose. Any lease
entered into by the authority with a participating party, and each
agreement, note, or other instrument evidencing the obligations of a
participating party to the authority, shall provide that the rents or
principal, interest, and other charges payable by the participating
party shall be sufficient to provide for all of the following:
(1) To pay the principal, sinking fund payments, if any, premiums,
if any, and the interest on outstanding bonds of the authority
issued in respect of the project when due and payable.
(2) To create and maintain reserves that may, but need not
necessarily be required or provided for, in the resolution relating
to the revenue bonds of the authority.
(3) To pay its share of the administrative costs and expenses of
the authority.
(b) The authority shall pledge the revenues derived and to be
derived from a project or from a participating party for the purposes
specified in paragraphs (1), (2), and (3) of subdivision (a). The
authority may issue additional revenue bonds that may be ranked on a
parity with other bonds relating to the project to the extent, and
under the terms and conditions provided, in the bond resolution.
(c) The authority and a participating party may include in any
lease or agreement between them or with a credit provider any terms
and conditions relating to insurance, liquidity, or credit
enhancement of the bonds, or any other lawful terms and conditions
the authority deems necessary or desirable to facilitate the purposes
of this chapter.
17193.5. (a) For purposes of this section, "public credit provider"
means any financial institution or combination of financial
institutions, that consists either solely, or has as a member or
participant, a public retirement system. Notwithstanding any other
provision of law, a public credit provider may, in connection with
providing credit enhancement for bonds, notes, certificates of
participation, or other evidences of indebtedness of a participating
party, require the participating party to agree to the following
conditions:
(1) If a participating party adopts a resolution by a majority
vote of its board to participate under this section, it shall provide
notice to the Controller of that election. The notice shall include
a schedule for the repayment of principal and interest on the bonds,
notes, certificates of participation, or other evidence of
indebtedness and identify the public credit provider that provided
credit enhancement. The notice shall be provided not later than the
date of issuance of the bonds.
(2) If, for any reason a public credit provider is required to
make principal or interest payments or both pursuant to a credit
enhancement agreement, the public credit provider shall immediately
notify the Controller of that fact and of the amount paid out by the
public credit provider.
(3) Upon receipt of the notice required by paragraph (2), the
Controller shall make an apportionment to the public credit provider
in the amount of the payments made by the public credit provider for
the purpose of reimbursing the public credit provider for its
expenditures made pursuant to the credit enhancement agreement. The
Controller shall make that apportionment only from moneys designated
for apportionments to a school district pursuant to Section 42238 or
to a county office of education pursuant to Section 2558 or to the
community college district pursuant to Section 84750, or in the case
of a charter school, pursuant to Section 47633.
(b) The amount apportioned for a participating party pursuant to
this section shall be deemed to be an allocation to the participating
party for purposes of subdivision (b) or Section 8 of Article XVI of
the California Constitution. For purposes of computing revenue
limits or revenue levels pursuant to Section 42338 for any school
district or pursuant to Section 2558 for any county office of
education or pursuant to Section 84750 for any community college
district, the revenue limit or revenue level for any fiscal year in
which funds are apportioned for the district or for the county office
of education pursuant to this section shall include any amounts
apportioned by the Controller pursuant to paragraph (3) of
subdivision (a). For the purposes of computing the general-purpose
entitlement of a charter school pursuant to Section 47633, that
entitlement shall include any amounts apportioned by the Controller
pursuant to paragraph (3) of subdivision (a). The participating party
and its creditors do not have a claim to funds apportioned or
anticipated to be apportioned to the trustee by the Controller
pursuant to paragraph (3) of subdivision (a).
17194. The authority may authorize any participating party to act
as its agent in the performance of acts specifically approved by the
authority, and all acts required under Article 3 (commencing with
Section 17280) of Chapter 3 of Part 10.5. The authorizations may
include, but are not necessarily limited to, all of the following:
(a) The selection of school or college sites.
(b) The securing of appraisals.
(c) Contracts for architectural services.
(d) The advertisement for construction bids and the entry into
contracts for construction.
(e) The purchase of furniture and equipment.
17195. Whenever the principal and interest on bonds issued by the
authority to finance the cost of a project or working capital, or to
refinance the outstanding indebtedness of one or more participating
parties, including any refunding bonds issued to refund and refinance
those bonds, have been fully paid or retired, or whenever adequate
provision has been made to fully pay and retire the bonds, and all
other conditions of the resolution, lease, trust indenture and any
security interest, or any other instrument or instruments authorizing
and securing the bonds have been satisfied and the lien of security
interest has been released in accordance with those provisions, the
authority shall promptly provide for and execute any releases,
release deeds, reassignments, deeds, and conveyances as are necessary
and required to convey or release its rights, title, and interest in
the project financed, to the participating parties.
17196. (a) This chapter shall be deemed to provide a complete,
additional, and alternative method for accomplishing the acts
authorized in this chapter, and shall be deemed as being supplemental
and additional to the powers conferred by other applicable laws,
except that the issuance of revenue bonds and refunding bonds and the
undertaking or projects or financings under this chapter need not
comply with the requirements of any other laws applicable to the
issuance of bonds, including, without limitation, Division 13
(commencing with Section 21000) of the Public Resources Code.
(b) Except as provided in subdivision (a), the financing of a
project under this chapter shall not exempt a project from any of the
requirements of law which are otherwise applicable to the project.
17197. To the extent that the provisions of this chapter are
inconsistent with any other provisions of any general statute, or a
special act or parts thereof, the provisions of this chapter shall be
deemed controlling.
17198. Any net earnings of the authority beyond that necessary for
the retirement of any obligations issued by the authority, or to
implement the purposes of this chapter, may inure only to the benefit
of the State of California or the authority.
17199. Upon the dissolution of the authority, title to all property
owned by the authority shall vest in the successor authority created
by the Legislature, if any, if the successor authority meets the
requirements of Section 103 of the federal Internal Revenue Code of
1954, as amended, and its implementing regulations, as an authority
entitled to issue obligations on behalf of the State of California,
the interest from which is exempted from federal income taxation.
In the event that a successor authority is not created, title to
all property owned by the authority shall vest in the State of
California.
17199.1. (a) Any participating party, exclusively for the purpose
of securing financing or refinancing of projects or working capital
pursuant to this chapter through the issuance, by the authority, of
revenue bonds, certificates of participation, or other means, and
notwithstanding any other provision of law, may: (1) sell to the
authority all or part of any rights to or possibilities regarding the
state's share of funding for school facilities approved by the State
Allocation Board pursuant to Chapter 12.5 (commencing with Sec.
17070.10) including amounts apportioned and funded and amounts
approved but not yet funded by the State Allocation Board from
proceeds of state bonds already authorized by the electors but not
yet issued; (2) issue bonds to the authority; or (3) borrow money or
purchase or lease educational facilities from the authority, and in
connection therewith, sell or lease property to the authority, in
each case at any interest rate or rates, rental provisions, with any
maturity date or dates or term, and with any other transfer,
assignment, payment, security, default, remedy, and other terms or
provisions as may be specified in the sale of rights agreement or the
bonds of the participating party or a loan, loan purchase,
installment sale, lease, or other agreement between the authority and
the participating party, subject to the following conditions:
(A) The sum of the amount borrowed to finance working capital and
the interest payable thereon at the initial interest rate if interest
is variable, shall not exceed 85 percent of the estimated amount of
uncollected taxes, income, revenue, cash receipts, and other funds
received by the participating party, which will be available in any
fiscal year for the repayment of the loan and the interest thereon.
For purposes of this paragraph, "revenue" includes, but is not
limited to, federal and state funds received by the participating
party.
(B) In computing the maximum amount that may be borrowed in any
fiscal year pursuant to subparagraph (A), the participating party may
exclude the amount of any principal or interest which is secured by
a pledge of the amount in any inactive or term deposit of the
participating party which has a term scheduled to terminate during
that fiscal year.
(C) A participating party that borrows money to finance working
capital pursuant to this subdivision shall be required to repay and
discharge the loan, including interest, within 15 months of the loan
date.
(D) In enacting this chapter, it is the intent of the Legislature
to provide financing of working capital needed to cover temporary or
cashflow deficits and needs for working capital and not long-term
budget deficits or shortfalls in funding. The participating party
must demonstrate to the satisfaction of the authority that, during
the term of any working capital loan received pursuant to this
chapter, the participating party will receive or otherwise have
(without additional borrowing) sufficient funds to repay and
discharge the loan. The participating party may take into account all
funds received by the participating party and may base future
projections upon historical experience or reasonable expectations, or
a combination thereof.
(b) Notwithstanding Sections 700, 703, and 1045 of the Civil Code,
the rights and possibilities that a participating party may have or
obtain in the future to an approved state contribution to funding for
school facilities pursuant to Chapter 12.5 (commencing with Sec.
17070.10) that remains unfunded pending the issuance of state bonds
already authorized by the electors shall constitute property for all
purposes and may be transferred as provided in subdivision (a). In
the case of any transfer or assignment of rights or possibilities
relating to funds for which bonds have been approved by the voters
but are not yet available, the transfer or assignment shall be
approved by resolution of the State Allocation Board prior to
becoming effective.
(c) Any participating party may enter into any agreement for
liquidity or credit enhancement, with any reimbursement, payment,
interest, security, default, remedy, and other terms it may deem
necessary or appropriate in connection with the issuance of bonds,
the borrowing of money or the lease or purchase of educational
facilities, whichever is applicable. Any participating party or
parties may also do all things and execute all documents as may be
necessary or desirable in connection with the issuance of
certificates of participation, or other interests, in any bond, loan,
note, installment sale, lease, or other agreement of the
participating party.
(d) A school district may by resolution authorize any county or
city board of education or superintendent of schools, a community
college district may by resolution authorize the Board of Governors
of the California Community Colleges or the Chancellor of the
California Community Colleges, and a charter school may by resolution
authorize its chartering entity or educational management
organization, to act as its agent in the performance of any of the
matters permitted by this section or any other provision of this
chapter. Notwithstanding any other provision of law, the agent shall
have the powers granted by the resolution for purposes of this
chapter. The resolution shall be deemed to bind the school district,
charter school, or community college district, as the case may be, to
any contract, agreement, instrument, or other document executed by
the agent on behalf of the school district, charter school, or
community college district, and all duties, obligations, or
responsibilities contained therein on the part of the school
district, charter school, or community college district, to the same
extent as if duly authorized, executed, and delivered by the school
district, charter school, or community college district.
(e) This section shall be deemed to provide a complete,
additional, and alternative method for accomplishing the acts
authorized by this section, and the sale or transfer of any rights to
or possibilities regarding the state share of funding for school
facilities approved by the State Allocation Board including amounts
apportioned and funded and amounts approved but not yet funded from
proceeds of state bonds already authorized by the electors but not
yet issued, issuance of bonds to, borrowing of money from, or sale or
purchase or lease of educational facilities from or to, the
authority. Any agreement entered into in connection with the transfer
of any rights to or possibilities regarding the state contribution
for funding for school facilities pursuant to Chapter 12.5
(commencing with Section 17070.10), including amounts apportioned and
funded and amounts approved but not yet funded by the State
Allocation Board from proceeds of state bonds already authorized by
the electors but not yet issued, or the issuance of bonds, the
borrowing of money or the sale, purchase, or lease of educational
facilities, including, without limitation, any agreement for
liquidity or credit enhancement under this section, need not comply
with the requirements of any other law applicable to issuance of
bonds, borrowing, selling, purchasing, leasing, pledge, encumbrance,
or credit, as the case may be, by a school district, charter school,
or community college district, or by a county or city board of
education or superintendent of schools, or the Board of Governors of
the California Community Colleges or Chancellor of the California
Community Colleges, or the governing board of a charter school,
chartering entity, or educational management organization.
17199.2. An action may be commenced under Chapter 9 (commencing
with Section 860) of Title 10 of Part 2 of the Code of Civil
Procedure to determine the validity of any issuance or proposed
issuance of revenue bonds, the loan of the proceeds thereof, the
sale, purchase, or lease of facilities under this chapter, or the
legality and validity of any proceedings previously taken or proposed
in a resolution of the authority to be taken for the authorization,
issuance, sale, and delivery of the bonds, for the use of the
proceeds thereof, or for the payment of the principal and interest
thereon.
17199.3. (a) The total amount of revenue bonds which may be issued
and outstanding at any time for purposes of this chapter, other than
those revenue bonds issued under Section 17199.4, shall not exceed
four hundred million dollars ($400,000,000).
(b) The total amount that may be outstanding at any time under
this chapter, for purposes of Section 17199.4 only, shall not exceed
four billion dollars ($4,000,000,000).
(c) For purposes of subdivisions (a) and (b), bonds which meet any
of the following conditions shall not be deemed to be outstanding:
(1) Bonds which have been refunded pursuant to Section 17188.
(2) Bonds for which money or securities in amounts necessary to
pay or redeem the principal, interest, or any redemption premium on
the bonds have been deposited in trust.
(3) Bonds which have been issued to provide working capital.
17199.4. (a) Notwithstanding any other law, any participating
party, in connection with securing financing or refinancing of
projects, or working capital pursuant to this chapter, may elect to
guarantee or provide for payment of the bonds in accordance with the
following conditions:
(1) If a participating party adopts a resolution by a majority
vote of its board to participate under this section, it shall provide
notice to the Controller of that election. The notice shall include
a schedule for the repayment of principal and interest on the bonds,
and any other costs necessary or incidental to financing pursuant to
this chapter, and identify a trustee appointed by the participating
party or the authority for purposes of this section. The notice shall
be provided not later than the date of issuance of the bonds or 60
days prior to the next payment, whichever date is later. The
participating party shall update the notice at least annually if
there is a change in the required payment for any reason, including,
but not limited to, providing for new or increased costs necessary or
incidental to the financing.
(2) If, for any reason, the participating party will not make a
payment at the time the payment is required, the participating party
shall notify the trustee of that fact and of the amount of the
deficiency. If the trustee receives this notice from the
participating party, or does not receive any payment by the date that
payment becomes due, the trustee shall immediately communicate that
information to the Controller.
(3) Upon receipt of the notice required by paragraph (2), the
Controller shall make an apportionment to the trustee on the date
shown in the schedule in the amount of the deficiency for the purpose
of making the required payment. The Controller shall make that
apportionment only from moneys in Section A of the State School Fund
designated for apportionment to a school district pursuant to Section
42238 or to the county office of education pursuant to Section 2558,
or in the case of a charter school, pursuant to Section 47633.
(4) As an alternative to the procedures set forth in paragraphs
(2) and (3), the participating party may provide a transfer schedule
in its notice to the Controller of its election to participate under
this section. The transfer schedule shall set forth amounts to be
transferred to the trustee and the date for the transfers. The
Controller shall, subject to the limitation in paragraph (3), make
apportionments to the trustee of those amounts on the specified date
for the purpose of making those transfers. The authority may require
a participating party to proceed under this subdivision.
(b) (1) The amount apportioned for a participating party pursuant
to this section shall be deemed to be an allocation to the
participating party for purposes of subdivision (b) of Section 8 of
Article XVI of the California Constitution.
(2) For purposes of computing revenue limits pursuant to Section
42238 for any school district or pursuant to Section 2558 for any
county office of education, the revenue limit for any fiscal year in
which funds are apportioned for the participating party pursuant to
this section shall include any amounts apportioned by the Controller
pursuant to paragraphs (3) and (4) of subdivision (a).
(3) For the purposes of computing the general-purpose entitlement
of a charter school pursuant to Section 47633, that entitlement shall
include any amounts apportioned by the Controller pursuant to
paragraphs (3) and (4) of subdivision (a). The participating party
and its creditors do not have a claim to funds apportioned or
anticipated to be apportioned to the trustee by the Controller
pursuant to paragraph (3) and (4) of subdivision (a), or to the funds
apportioned to by the Controller to the trustee under any other
provision of this section.
(c) (1) Participating parties that elect to participate under
this section shall apply to the authority. The authority shall
consider each of the following priorities in making funds available:
(A) First priority shall be given to school districts, charter
schools, or county offices of education that apply for funding for
instructional classroom space.
(B) Second priority shall be given to school districts, charter
schools, or county offices of education that apply for funding of
modernization of instructional classroom space.
(C) Third priority shall be given to all other eligible costs, as
defined in Section 17173.
(2) The authority shall prioritize applications at appropriate
intervals.
(3) A school district electing to participate under this section
that has applied for revenue bond moneys for the purposes of joint
venture school facilities construction projects, pursuant to Article
5 (commencing with Section 17060) of Chapter 12, shall not be subject
to the priorities set forth in paragraph (1).
(d) This section shall not be construed to make the State of
California liable for any payments within the meaning of Section 1 of
Article XVI of the California Constitution or otherwise, except as
expressly provided in this section.
(e) A school district that has a qualified or negative
certification pursuant to Section 42131, or a county office of
education that has a qualified or negative certification pursuant to
Section 1240, may not participate under this section.
17199.5. Notwithstanding Section 17199.4, if the bonds were subject
to a credit enhancement agreement provided by a public credit
provider pursuant to Section 17193.5 for which a payment for
principal or interest, or both, has been made by the public credit
provider, the Controller shall allocate to the public credit
provider, rather than the trustee, the percentage of the
apportionment to be made pursuant to this paragraph equal to the
percentage of the outstanding indebtedness which is subject to the
credit enhancement agreement.

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